With the pending expansion of the Panama Canal posing a competitive threat, Mayor Antonio Villaraigosa said Wednesday the top priority for the Port of Los Angeles is dredging for a deep-water channel that can accommodate larger cargo ships.

“The Port of Los Angeles is an economic engine – not only for the city, but for the nation,” Villaraigosa said at a City Hall news conference, where he released an updated Industrial, Economic and Administrative survey.

“I am pleased the report shows that the port is working diligently to stay on the cutting edge of new technology while taking the steps necessary to ensure we remain competitive during the lead-up to the expansion of the Panama Canal.”

Controller Wendy Greuel, whose office oversaw the study, said the Panama Canal upgrade poses the most serious competitive threat to the West Coast port.

“In 2014, the expanded Panama Canal will open for public use,” Greuel said. “This new avenue for Pacific shipping challenges the status of the Los Angeles Ports as the premier destination for cargo coming to America.”

The audit recommended that officials improve internal processes to ensure that projects are clearly defined. It pointed to changes in work orders that sent $20 million in projects soaring to a cost of $116 million.

Port Executive Director Geraldine Knatz said part of the problem was due to changes in needs.

As an example, she cited an initial plan to expand space for port police, a project estimated at $6.5 million. However, changes in security needs doubled the size of the force, which led to the construction of a $65million project.

Knatz said the port also is working to improve its image and provide facilities to make it more of a tourist destination.

A waterfront park was recently completed in Wilmington, and plans have been developed to create a water basin for tall ships to sail into the downtown San Pedro area.